Stocks Fall As Financials, Software Slump; CLS, FIX, GOOGL In Focus

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0:39good afternoon everyone and welcome to stock market today for tuesday january 13th it's alexis garcia here and stocks pulled back today as software and financials slumped we saw some easing of the inflation rate with new economic data today. And JP Morgan posted mixed results to kick off earnings season. So here with me to help break down everything you need to know about today's market action is IBD News Editor Ed Carson. So Ed, what do you have on tap for us today? Yeah, I mean, while certain sectors slumped, I want to take a look at some AI stocks, Celestica, Comfort Systems, and a little known company called Google.

1:22Oh, OK. Well, very good, Ed. Before we get to that, let's go ahead and check in on the major indexes. The S &P 500 finishing the day down two-tenths of a percent, the Dow fading eight-tenths of a percent, the NASDAQ down about a tenth of a percent, and the small caps also down around a tenth of a percent, Ed. So I'll go ahead and get my charts going up today. But we saw similar action across the major indexes, Ed, fading from those highs. But it looks like the S &P 500 here clawing a little bit back off the lows of today. But give me your thoughts on the market action. Yeah, I mean, like, the market just pulled back from record highs.

2:07And so we can't get too excited about it. I think markets were pretty happy with the inflation data. But the J.P. Morgan earnings, Delta earnings, and also some other concerns, some other financials were an issue. But we're holding up near highs. So after some gains we've had, that's fine. I don't think there should be too worried about things in that regard. The Russell 2000 hit a new high today before backing off a little bit, just fractionally. So I think in general is that the market is near highs. People should be pretty heavily invested, but you should also recognize what sectors are working and what's not working.

2:45Software is clearly not working. Some of those mega caps are not working. Google is working, but several are not. So you can't be doing that. And so just be diversified, not too concentrated on any particular theme, and be aware of earnings coming up. I mean, Delta and JPMorgan looked good before the open, and then they had earnings. And so that changed things around. Yeah, looking at JPM here, ugly downside reversal today. Down over 4%, closing below the 50-day line. We can check in on Delta II, also falling today about 2.4%, closing below the 21-day moving average, Ed. So talking about what's working, let's just check in on market breadth with RSP.

3:30That's the S &P 500 equal-weighted ETF. Again, basically flat for today, but when you look at QQEW, Ed, that's the NASDAQ 100 select equal-weighted ETF. We have a little bit more tech names here taking a little bit more of a hit, down about eight-tenths of a percent today. And again, closing below that short-term moving average. Yeah, it's pretty ugly in the software area. That's where a lot of the damage was. And that's where a lot of – there's a lot of big but not enormous software makers in the NASDAQ 100. I mean, there's some giants like Microsoft, obviously, but a lot of those names. And those were hit hard.

4:08And they've been struggling. And so that was definitely an issue. Yeah, so that is a little bit of concern that that is coming back to the 50-day line. But that's, again, why investors need to be staying out there, staying, looking at other areas. Software is not good. Some of these other areas are not good and just don't focus on the areas that are working. And there are a lot of areas that are working. Yeah, let's take a look at ARKK, Ed. So we've seen growth stocks coming on here again, another day of gains up eight tenths of a percent. We can also just check in on the FFTY, that's the IBD50, down slightly today.

4:45But again, moving above the 50-day moving average, trying to build the right side of that base. But talk to me about ARKK and what you're seeing with the more growth speculative names. Yeah, these are more of the high beta specular names, but not as many software. So they're getting into more AI and some crypto stuff. And so some of those things are working. Obviously, Tesla is the biggest position. Tesla didn't do much at all today, which is fine. So, but yeah, having the specular names up there, again, it's just sort of these different shifts. It took a while for those names to get back above the 50-day line, at least ARK itself.

5:23Yeah, I don't know. So it looks like we lost Ed here for quite a minute. But yeah, it looks like ARKK2, we can kind of see a possible trend line here with ARKK. We'll just keep going. Hopefully we can get Ed back on. But let's take a look at SMH. Ed, can you hear me okay? I can hear you okay. So yeah, so sorry about that. Well, I can hear you now. No problem. So, yeah, let's – do we need to talk about ARK anymore or can we move on? No, I don't think so. I don't think so. That's fine. All right. Let's take a look at SMH. Ed, chips up slightly today, but, again, reversing off the highs for today, but still moving into higher ground here for the Van X semiconductor.

6:12Yeah, there's definitely some winners and losers in this today, but, like, there were some nice gainers. And this is at record highs. I mean, that's what it comes down to. it at record highs. So looking good. All right. How about ITA? That is the Aerospace and Defense ETF, another gain of about half a percent today, extended from this recent buy zone. But Aerospace and Defense looking pretty strong here to start 2026. Yeah, absolutely. A lot of different things. Space stocks are strong. Defense stocks are strong. Traditional jet engine makers. Boeing is back at highs. It had been a real laggard.

6:49All of a sudden, that's really come on the last couple months. So this is definitely one of the stronger areas right now. So, yeah, this is showing a lot of different names, a lot of different levels of risk and focus in here. All right. And then let's take a look at XLF because, again, we have a lot of financial earnings this week and into next. This went down today almost 2%, below the 21-day line. And no doubt, Ed, those J.P. Morgan results wane on XLF. Yeah. So beat on earnings, it seems like on expenses, which is ironic because J.P. Morgan actually sold off a couple months ago when they talked about worrying about expenses, but then they were able to cut costs.

7:31So that offsets some revenue, revenue myths. And there was also an investment banking miss. So that is important for some of the other big banks that come later this week. Well, they also show an investment banking shortfall. Trading was strong. So there was that. But so that is something to watch out. JP Morgan comes in. And there's also Visa. And like Visa sold off again because there was further stuff. Like there was, you know, like Trump added on. It wasn't just the 10 % cap. It's maybe some other things that could hurt the position of Visa and MasterCard. So those names came off. And Visa and JP Morgan are both Dow Jones components.

8:10So you can see why the Dow was a loser along with Salesforce, a big loser today. I mean, so like there were some specific names that were had some pretty ugly losses technically, too. So we'll have to see because we will get Citigroup, Bank of America, and I believe Wells Fargo tomorrow. And then we'll get Goldman Sachs and Morgan Stanley, the sort of more the pure play investment banks on Thursday. So but yeah, this is again, this is why we pay attention to earnings. You know, if this is because of all this thing going in, it's like it was looking strong. It was looking good heading into earnings.

8:44And now this sector is down. So it's not just what you own. It's the stocks, the earnings reports that could affect what you own. And especially early on when your companies haven't reported it, but these giants do. So everybody says, well, if they fell, company X will fall too, right? Or might. So that's something that really hit the financials today. All right. And how about we wrap this up with a look at software, Ed? That's IGV. this one down 1.9 % today and really trading below all these key moving averages. Yeah. And this has been struggling for quite a while. It's really, it's unlike ARK, it's never gotten above the 50-day line the last few months.

9:27And the relative strength line has sort of been lagging since at least September. And even then that wasn't a new high. It sort of really hit a high maybe around June. And I'm not sure if that's, yeah, if you can go to weekly to see if that was really the peak might have been back in the late 2024, you know, for the relative strength line. So there definitely are software makers that have made big runs. I mean, this is coming, even though Palantir made an enormous run, the fact that the whole group, you know, as you know, Palantir is the number one stock in that group. And the fact that software overall has been such a laggard, you know, is telling about how much weakness we did look at Salesforce already.

10:07We looked at some of those things. There's a lot of stocks that are a long way off their highs.

10:39All right, Ed. Well, let's go ahead and take a look at some individual stocks, starting with Celestica. This one up 4.5 % today, retaking the 50-day line. Yeah, this was an interesting one because, you know, you can see how there was some ugliness in this chart. Go back to mid-December, you see it plunges through the 50-day line. Honestly, there was volatility before that, but it plunged through the 50-day line and couldn't get back above. And last week, there was a lot of volatility. And we'll see that with the next stock we're going to look at is that it went back and forth, in part because there was concerns about how like the CES announcement, not necessarily from Celestica, but what the new NVIDIA chip might mean for a lot of other, you know, the cables, the connectors, the cooling systems.

11:26And the market is now comfortable with that, but it wasn't obvious. I mean, it was not obvious at the time, but today going above the 50-day line, the volume wasn't tremendous, but at least it was a decent volume. Getting above that 50-day line, I think people could use this as an early entry because if you went all the way up to the highs from here, it'd be getting pretty extended from the 50-day line. It's already, it's 4%. It's fine here, but you wouldn't want to, you know, getting, you know, say 10, 15, 20 percent and then starting. That isn't really like how I like to do it. But I think this is the place where people could have entered again.

12:02And there's a lot of, the financials are great. Accelerating revenue growth for several quarters. Earnings were accelerating for several quarters. Finally cooled to only 52 percent and strong growth seen through this year. And one of the things we're going to be running into here, Ed, earnings due here in a couple weeks. So again, some of these stocks may be setting up, but we'll have potentially earnings around the corner. So eyeing those early entries, really important during that time. Let's take a look at FIX, that's Comfort Systems. This one up 3.4 % today, Ed, and really getting above this 1 ,036 level here, which seems to have been having some resistance here.

12:47So maybe trying to break above. have and it finally declared that and you can see back in mid-december it also had issues you know it did a little better because it it held up at first and then finally went through the 50-day line but it got back above sooner so it was like okay here we go um and i suppose people when it first rebounded off the 50-day line they could have bought it would have been tricky last week as the stock fell back but it did hold the 50-day line so that was nice it was nice this one showed strength but you didn't know and it's just like hey if the new chip doesn't need as many cooling systems, that's, that would not be a good sign.

13:19I mean, you could have certainly, there was, you could see the narrative where this was going to have a tough time. But the market is now saying, well, no, we think we're pretty comfortable with things right now. And this one has accelerating growth on the EPS and revenue side. So, you know, and really, you know, so it ultimately had a pretty tight close last week. And, you know, so it was almost like, oh, what, what movement? It was barely any movement for the week and then made that nice move. Relative strength at a new high. So it's been volatile, but ultimately the RS line has been holding strong and it's been holding support during this time.

13:58All right. Well, let's wrap this up with a look at Google, Ed. This one up 1.2 % today and again, moving higher into this buy area here from a 32883 pivot. You know, one thing is that during this last couple of weeks, there seem to have been stocks that have moved out and you've had like 15 minutes to buy them. And then it's like they're getting pretty high up there. And some of them have kept moving, but often getting to a point where you're like, boy, that seems extended. I don't want to buy them. This one's had opportunities. There's been some early entries on this one. It's been nudging higher.

14:32It's still in the buy zone. It's not too extended. You know, it's getting there with a 50-day line. I think yesterday would have been a better day to do it, but you can still do that. And it's still, this is just, this is the mega cap that's leading the market. This is the one, it's almost, it's getting to be almost the same size as NVIDIA. This one is making it work with a lot of things, the Apple deal, shopping. They're, again, making AI work for them where, you know, eight months ago or so, people were really worried that AI was going to overwhelm them or they were going to spend a gargantuan amount of money and not get the payoff.

15:06They were only going to do that to maintain their share, you know, their search share. But they're finding ways to make that work where a lot of other companies, people are wondering, well, are meta and Microsoft actually going to, you know, get the return. Again, this has gone up a lot, but made a nice pause after a big run. The relative strength lines at a record high. You know, it's just you can see all the skyscrapers on the weekly chart down below just over the last several months. It's just boom, boom, boom. So there's just been a lot of really positive news, positive technical action, positive earnings for this mega cap.

15:43All right, Ed. Well, thank you so much for your insights today. We really appreciate it. Thank you. All right. Well, that wraps it up for this edition of Stock Market Today. If you want more market analysis, be sure to tune in tomorrow morning, starting with IBD Live. You can head on over to investors.com slash IBD live for all the details there. And Ed will be back tomorrow on a stock market today with Rachel Fox in the hosting chair. So tune in for that. And we'll see you back here tomorrow after the close.

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